Consider this common business scenario: You have just delivered goods to a customer, and they are supposed to pay you in 30 days. Instead of waiting a month to get your money, you can sell that invoice to us. We will give you most of the invoice amount upfront, hold onto a small percentage as a fee, and then collect the full payment from your customer when it is due.
At Simplex Group, we partner with OTR Solutions to help set up logistics providers – both emerging and established – for big wins, no matter the market conditions. Our freight factoring company services allow you to pick your clients with confidence, knowing we have your back when it comes to cash flow. Our non-recourse factoring puts all the payment risks on us, not you. We are invested in your success and committed to fueling your growth for the long haul. Contact us to learn more.
What is Trucking Factoring?
Commonly known as freight bill factoring or freight invoice financing, it is a financial solution where you – the trucking company – sell your outstanding invoices to a freight factoring company via Simplex. This allows transportation companies to get paid quickly, usually within 24 hours, instead of waiting for the customer to pay. Here is how this line of credit works for trucking companies:
Gather the necessary documents
After your truck driver finishes delivering the cargo to its destination, collect all the paperwork related to the job from freight brokers, such as the rate confirmation, bill of lading (BOL), and any other relevant documents. You can easily upload these through the OTR Solutions App. OTR is our partner in factoring, so you will use their app and portal when uploading your paperwork.
Submit to a factoring invoice provider
Forward the collected paperwork to your partnered freight factoring company service through Simplex as the intermediary. This can be done online and takes only a few minutes.
Verification of delivery
The freight factoring company verifies the successful delivery within a few hours.
Receive your funds
Once the delivery is verified, the factoring company pays the funds into your account. You can choose how you would like to receive these funds — whether it is through a wire transfer, ACH, or a fuel card. Some options can get you paid almost instantly (same-day funding).
Invoice responsibility shifts
At this point, the freight factoring company takes over the responsibility of collecting the payment from your customer. You are free to focus on your core business activities knowing that the invoice is in good hands.
Customer payment
When the customer eventually pays the invoice, they will send the payment directly to the factoring company, not to you (not to the trucking companies).
Closing the loop
After receiving the customer’s payment, the firm will deduct their factoring fee and then close out the invoice. Any remaining balance, known as the “reserve,” is returned to you.
Throughout this process, you can track the status of your invoices and payments through the OTR Solutions Portal, giving you full visibility and control. We also offer regular reports and analytics on customer payment behaviors, so you can make more informed decisions about future trucking business.
Why Factoring is The Best Path to Financial Solvency
There are a few different ways to get running when your company is struggling. Small business loans are always an option. However, a bank will have to approve you. They will run your credit and do an extensive background search on you. It may take a long time to get approved, and your interest rate may be very high. You may end up waiting as long as you would have waited for your clients to pay you. This defeats the purpose of getting a loan in the first place. Plus, the loan can take a long time to pay back. When you use a freight factoring company, you can get same-day invoice processing. The money can be in your bank in as little as 24 hours after the sale goes through.
Credit cards are another way of getting money in a hurry. When you open a business, you are certain to get many offers from credit card companies. Some of these companies have a high interest rate, and some will charge you annual fees. Whenever you make a charge on a credit card, you are just getting yourself into more debt. That debt will eventually have to be paid. When you sell your invoices, you will not accumulate any new debt.
Why Do You Need Help From Freight Factoring Companies For Trucking?
Small trucking companies tend to have clients who are also small businesses. They are unlikely to pay their bills the second they come in and will probably wait until the bill is due. When you are first starting, you will have many bills coming in. The faster you pay those bills the better your credit will be. The better your credit rate is, the lower your interest rates will be. Truck factoring can save you money in the long run. Large trucking companies can also benefit from enhanced liquidity and operational efficiency with freight factoring services.
A Full-Service Provider
There is no other company like Simplex Group in the nation. In addition to our freight factoring company partnerships, we are a full-service trucking compliance company. Not only can we ensure that you are fully compliant with Federal Motor Carrier Safety Administration regulations, we will also make sure you pass your new entrant audit with flying colors. We will also make sure that you have the appropriate amount of insurance and that your taxes are paid on time. We can even help you with trip planning. You need to make your trucking companies successful. We want to make sure that you have enough money to stay in business for many years to come. Give us a call today.
Why You Need a Reliable Factoring Program
We have partnered with one of the top transportation factoring companies. They have been in business for over a decade and use the best software to process invoices.
The company offers a client portal for complete transparency, so you will be able to see what is going on with your accounts and invoice payments at all times. They have a fantastic customer service team who will always answer our questions and yours.
Some companies will not give you all of your money right away. They will force you to keep a certain amount of the money that they owe you in reserve. You need your money now, and we know it!
Some freight factoring services will charge hefty termination fees for clients who want to cancel their contracts. The whole point of truck factoring is for a company to get back on its feet financially.
If a trucking company is doing its job correctly, it will not need a factoring company for long, and it should never be charged a factoring fee. You should never have to pay an initiation fee either. Factoring companies make plenty of money when they take on new clients, so they do not have to charge additional fees.
Some nonrecourse truck factoring companies will have a chargeback policy. This means they will ask you to refund your advance and return your invoice. When trucking companies partner with us, they will get a true nonrecourse provider.
FAQs
What percentage of my money will a trucking factoring company keep?
Typically, factoring companies retain a certain percentage of invoices as a fee for their services to trucking companies. A factoring company will normally withhold 2% to 5% of each invoice. However, this percentage can vary depending on several factors such as the volume of invoices factored and your agreement with the factoring company. You can review the terms and conditions of your factoring agreement for the percentage of your money that will be retained. If you don’t find this information in the agreement, you should contact the factoring company.
Will the customer know that my company uses a factoring company?
Yes. When a trucking company partners with a factoring company, the factoring company will send a Notice of Assignment to your client that will let them know about the arrangement you have with them. When a trucking company’s relationship with the factoring company is over, the client will receive a letter of release.
Are you looking for a more confidential service for your trucking business? Some trucking factoring companies operate in a more confidential manner, where they handle the invoicing and payment processing service without informing your customers. While the factoring company would contact your customer to collect payment, they would disclose that they are a third party. You will have to check with your factoring company to determine if they can operate in such a manner. However, while the company may not have to explicitly share that they are a factoring company, the client will be notified that their invoicing and payment collections are being handled by a third party.
How long will it take to get started?
Generally, freight factoring companies can get you started in a few hours. If you have the required documentation, you can request the factoring company to expedite the onboarding process to get you started as soon as possible. Most trucking companies need consistent cash flow, and trucking factoring can help with that. After you have submitted all the required documents, we will review and set up your account. Once you are approved, you can start submitting your invoices for factoring. Our team can work with you to avoid delays caused by incomplete documentation or compliance and legal concerns.
How does freight factoring affect my credit score?
Freight factoring is a financial transaction and not a loan or credit. Therefore it does not directly impact the credit score of trucking businesses. As the trucking company sells invoices rather than take a loan, the transactions are typically not reported to the credit bureaus, and as a result, they do not have an impact on their credit score. However, it can offer indirect benefits to your credit score.
One of the less-known benefits of freight factoring is that it can help you improve your credit score. In some cases, bad credit for a business can be a result of a lack of cash flow. With freight factoring, businesses can ensure a stable source of working capital. Factoring companies specialize in various collection practices to ensure stable income.
Why Choose Simplex Group for Your Trucking Industry Factoring Needs?
Are you tired of waiting 30, 60, or even 90 days for clients to pay up? Or have you been taking expensive small business loans to maintain cash flows? At Simplex, our transportation factoring services for owner-operators are designed to keep your business afloat, without the red tape of traditional loans.
We offer a free account management portal, so you are never in the dark about your freight factoring work accounts. We do not charge any hidden factoring fee or termination charges if you decide to leave the factoring agreement. The Simplex benefits do not stop there. From FMCSA compliance and truck permits to fuel advances from major brands, our experts have got you covered. We offer no monthly minimum volume fees. Call us at 1-866-931-7990 or complete this form to get started.